Sheikh Yousef Al Shelash has left his mark in the real estate industry since 1994.
“There was a huge business bubbling up, which was real estate funds,” says Al Shelash. His family was one of six who formed the Dar Al Arkan property development company. He is also chairman of Saudi Home Loans and Alkhair Capital, which have a symbiotic relationship. Al Shelash noticed a vacuum in the market involving newly licensed real estate funds. This spark sparked Yousef Al Shelash’s interest in establishing a credible real estate mortgage industry in Saudi Arabia and throughout the Middle East.
The lack of a proper regulatory framework for real estate loans in Saudi Arabia was the first major hurdle for Al Shelash. “The regulations were just getting started when I got involved,” he recalls. At that time, individuals did not understand how to take out a 15-year or 25-year loan. Yousef Al Shelash therefore first had to make potential buyers aware of the ins and outs of real estate credit. “At the same time, the full mortgage loan was still not set up; if you don’t repay the loan, the house is repossessed and you end up losing your investment,” says Al Shelash. “The main challenge was to evolve with changing regulations.”
Before Al Shelash introduced mortgages in the Middle East, it was common for individuals to need to save enough money to buy a house at full price. “Or you had to save to buy land, then you had to save to build a house on that land,” says Al Shelash. However, its Saudi home loans ushered in a whole new concept. “People didn’t have to wait until they had saved the full price. It has helped so many people acquire their first home,” says Yousef Al Shelash.
How Sheikh Yousef Al Shelash contributed to urbanization
The current success of the mortgage market in Saudi Arabia can be traced back to Al Shelash’s visions for the future of real estate funds. It had the added benefit of enhancing city life, as people living in the suburbs could now afford a city residence by taking out a mortgage. This translated into big business for Dar Al Arkan. “We are one of the biggest real estate development companies in Saudi Arabia,” says Yousef Al Shelash. The company is currently working on real estate development in eight countries.
“We started with very small projects,” explains Al Shelash. “Market growth certainly helped a lot, and eventually we took property development company Dar Al Arkan public in 2007.” One such project is the Shams Al Arous, a combination of contemporary residential and mixed-use properties in the Saudi port city of Jeddah. According to the company, “it includes a range of residential and mixed-use buildings, in addition to schools, shopping malls, beautifully landscaped green spaces, government offices and mosques. Shams Al Arous offers residents a modern, peaceful and ideal living environment.
Dar Al Arkan’s Golden Coast project, completed in 2006, is also located in Jeddah. It has 68 beautifully designed modern villas and is conveniently located near schools, public gardens, shopping malls and Jeddah International Airport. Meanwhile, in the holy city of Medina, Al Noor Villas are upscale duplexes near the Prophet’s Mosque. Dar Al Arkan notes: “The development comprises six architectural designs and offers excellent accommodation in its 80 residential units and duplex villas, with easy access to a range of services and modern lifestyle amenities, including a mosque and a public garden.
Also in Jeddah, Dar Al Arkan created the Naeem Al Jiwar project, which covers 2.2 million square meters and includes schools, mosques, parks and shopping malls. According to the company, “With an array of villas, residential spaces and commercial land ideally located, Naeem Al Jiwar is rich in investment opportunities. In addition, the proximity of the Naeem district to the Prophet’s Mosque offers easy access to the Quba Mosque, the Darb Al Sunnah gateway, universities and government institutions. In addition, project residents benefit from exclusive transportation services to and from these sites. »
The property developer has also created Sidra in Bosnia, which is a gated community a 35-minute drive from Sarajevo. Marketed as boutique vacation homes, Dar Al Arkan says the community offers “first-class amenities, restaurants and cafes, shops and supermarkets, a community mosque, clubhouse and five-star hotel, all available at your disposal, punctuated only with lush forest, surrounding mountains and a gentle breeze. And Sidra, Bosnia is strategically located for a wide range of attractions, from natural caves, rivers, nature reserves and parks, rock massifs to different sporting activities.
Similarities Between Mortgage Markets in Saudi Arabia and the United States
Fifteen years of hard work and business savvy have paid off for Yousef Al Shelash, who has nearly $15 billion in assets under management between the three companies under his chairmanship. “Now there is a fully developed mortgage market in Saudi Arabia, which is similar to the United States,” he says. Mortgages have been a common way for someone to purchase real estate in the United States since the borrowing program entered the housing market in the 1930s – not created by financial institutions, but by insurance brokers during the Great Depression.
Today, the United States has several types of mortgage lenders, including banks and federally backed mortgage companies created by Congress: Freddie Mac and Fannie Mae. According to Al Shelash, the Middle East market also includes government-owned refinancing companies that also buy mortgages to continue providing liquidity to the market. “But it wasn’t there when I started,” he says. “All of this had to evolve with the regulations, and I needed to convince so many banking institutions to fund these mortgages.”
He attributes much of Saudi Home Loans’ success to its relationship with the World Bank. Al Shelash says it was “a very big step because once so many banking institutions saw the World Bank‘s International Finance Corporation get involved in funding the company to provide these loans, [it] given a lot of confidence to so many banking institutions. Thus, one of the first financings came from the World Bank of the IFC. Soon after, many other financial institutions followed.